With gold and silver strong as of late, the Godfather of newsletter writers Richard Russell had this to say in his latest commentary, “(Bill) Gross warns that 75% of the US budget is nondiscretionary and is entitlement-based. With Medicare, Medicaid and Social Security, notes Gross, we are seeing $1 trillion deficits as far out as the eye can see. These three entitlements amount to 44% of Federal spending and their share is steadily rising.”

Richard Russell continues:

“Concludes Bill Gross, "Unless entitlements are substantially reformed, I am confident that this country will default on its debts, not in conventional ways, but by picking the pocket of savers via a combination of less observable, yet historically verifiable policies -- inflation". . . . . "You must attack entitlements," warns Gross, "and make 'debt' a four-letter word."

Bill Gross manages the largest bond fund on the planet. Gross means what he says. I'm guessing that Gross thinks that the US will NOT ACT until the crisis is actually upon us. The crisis that I believe Gross foresees is a collapse of the US dollar at a time when no foreigner will want to buy Treasuries. In anticipation of such a disaster, Gross has eliminated all US Treasury bonds from his huge, multi-billion dollar fund.

I ask myself, "Is this our fate? Is Congress going to allow the dollar to crash, will Congress, through its procrastination, allow the US to lose its greatest advantage -- the reserve status of the US dollar? Could this really happen? A collapse of the dollar is too grotesque to even contemplate. Yet I am definitely considering that such an horrendous set of circumstances could occur.

I've shown chart after chart of the US dollar. I've shown how the Dollar Index has been violating support levels. To refresh your thinking, I've included an up-dated chart of the US Dollar Index (above). What we see here is a giant head-and-shoulders top with a right shoulder that is in the process of breaking down.

Even as the dollar sinks, the public seems blissfully unaware of it. However, the public is aware of the effects of the sinking dollar. The public does note that it takes more dollars to buy food (price of food rising), the public does note that is takes more dollars to fill up the tanks of their cars (gasoline prices rising). The public notes that their college tuition bills and their medical bills are rising. In other words, the public experiences that their dollars buy less and less, with each passing month.

The public may be slow to learn, but you can't fool all the people all of the time. The great American public sees gold and silver rising. They learn about it through their newspapers, their radios and their TV sets. In due time, the public will want to protect themselves by buying gold and silver. It's only a matter of time.

Watching the relentless decline of the US dollar, I get the sense that the whole process is accelerating. Some of the smartest people in the land are warning about the decline of the dollar and the coming inflation.

As Bill Gross warns, we're heading for debt default via inflation.

The Russell advice, is the same as it's been for many years -- buy and own gold and silver. And forget about what “can't happen.”

Russell has been doing this for over half a century and is legendary for some of his long-term secular calls so global readers should take his warnings about a dollar collapse seriously. For years he has been pleading with his subscribers to protect themselves by purchasing physical gold and silver. My advice at this point is to accumulate physical gold and silver on a monthly basis. This method will give you a dollar cost average and you will learn to view pullbacks, even gut-wrenching ones as your friend because it will help your average cost basis.